In a joint announcement via social media with the Department of the Interior, President Obama announced the intention of designating 12 million acres of the Arctic wilderness as off-limits for oil and gas exploration. This considerable landmass—comprising a key part of the Arctic National Wildlife Refuge (ANWR)—supports an array of animal and plant species. While officially designating the land as wilderness would require congressional action, which in and of itself is doubtful in the wake of the Senate’s passing of Keystone XL legislation, Obama’s executive action temporarily shields the land with the Federal government’s highest level of protection. This announcement was met with hostility from Republican Senator Lisa Murkowski and concern over economic necessity from Independent Governor Bill Walker.
Senator Murkowski sees the apparently lucrative prospects of opening up the ANWR to oil and gas exploration. Nearly 90% of Alaska’s revenues are derived from oil and gas rents. Combined with falling oil prices, a lack of alternatives and pressure from constituents, Senator Murkowski attempts to spin the Federal government’s beneficial efforts as negative. The Federal government is seen as tyrannical, again interfering in a matter of state superiority. The fact that the Federal government is protecting land that is already designated as federal, not state owned or private, under the 1960’s Wilderness Act is tossed aside. A certain economic reality is also ignored: increased Alaskan oil and gas exploration would only drive natural resources prices down even farther, causing a decrease in the marginal revenue of every barrel of oil or gas. Increased supply would continue to outstrip demand.
| Congressman Young (R-AK) & Sen. Murkowski (R-AK) |
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Attempting to open up new areas of oil and gas exploration resembles the painstaking task of teenage party planning. One has to lobby for the approval of appropriate authorities (Federal government), arrange materials for consumption (identify reserves), and remember to invite desired individuals (oil and natural gas companies). When all of these pieces are arranged in place, Alaska hopes to ride this source of resource prosperity that appears to be everlasting. The deceptive reward for this undertaking is better embodied in another state’s foray into the world of boom-and-bust natural resource parties: North Dakota.
Like Alaska, North Dakota’s economy is dependent upon natural resource extraction, in addition to subsistence agriculture and livestock grazing. However, North Dakota boasts the fastest growing economy in the United States, along with the lowest unemployment rate at less than 5%. This is driven by large-scale natural gas extraction of the Bakken shale formation using the technique
known as hydraulic fracturing. The historic mining town of Williston has seen its population balloon since exploration began. North Dakota’s previously bare housing market now resembles Manhattan’s, characterized by historic shortages and sky-high prices. The state’s meager regulatory commissions struggle to keep pace with the record number of permits issued to extraction companies bent on enjoying their share of the fun.
| A typical hydraulic fracturing derrick outside Williston, ND |
At the height of the party, what can go wrong?
North Dakota is starting to feel the effects of post-party depression. The number of environmental incidents, including spills, blowouts, and flammable material leaks have risen in past years. The state is the home of America’s largest oil spill resulting from hydraulic fracturing: over 173,000 gallons of oil polluted nearby lake beds, rivers, and streams. Agricultural land has been left useless as wastewater spills blanket the surroundings with highly salinized water. The question to ask: is the apparent “boom” for Alaska worth the risks brought to light by North Dakota’s Project X went wrong?
Instead of pinning its hopes on an oil and gas boom, Alaska has the opportunity to become an unforeseen leader in the renewable energy market. Unlike contiguous states, Alaska has an abundant supply of potential geothermal and hydropower energy sites. Alaska’s rugged coastline can play host to the emergence of tidal power, an energy source that has already been widely explored in Europe. Referencing economic concern, Alaska can invest in “electronic commerce,” or e-commerce, a commercial sector that overcomes geographical or logistical challenges. Granted, this would mean that the state invest heavily in broadband Internet, a challenge given the isolation of some communities.
Senator Murkowski’s assertion that blocking oil extraction would threaten the ability to create a thriving economy for future generations fails to see the premise of what is being protected. Maintaining the natural beauty of the refuge is the cornerstone of Alaskans’ future. It is the responsibility of policymakers to create an economy that compliments the beauty that exists in the arctic.
